Apple Reboots Unlocked iPhone Market With $400 Premium (AAPL)

Last month, it seemed all but certain that
Apple was going to try to kill the cottage industry of people
"unlocking" iPhones from their official carriers, and then
reselling them, often for
big bucks overseas. Now it looks like it's game-on again --
but would-be buyers will have to shell out a few hundred dollars
extra.

How was Apple ever going to choke the unlocking biz? By letting
its carrier partner AT&T (T)
subsidize the phones down to $199, and requiring that buyers
activate them with 2-year contracts before leaving the store.

Now AT&T says that "in the future," it will offer a
"no-contract-required" iPhone. An 8-gigabyte unit will cost $599,
and a 16-gig model will cost $699 -- or $400 more than the
subsidized gadgets. (AT&T should even make a profit.) We
assume a similar deal will be available at Apple stores, too, and
we already know it'll be available in Italy, where an 8-gig iPhone
will run $790 and a 16-gig will cost $950.

Will these pricey, no-contract phones come pre-unlocked so
they'll work on any carrier -- like T-Mobile in the U.S., or any
GSM provider abroad? Maybe: Carriers' justification
for locking phones is that they've paid several hundred dollars
to subsidize them, so they should be locked to their network. But
probably not here, at least. AT&T does have a
multi-year exclusive deal to sell the iPhone in the U.S., so we
can't see them handing out unlocked phones just yet. No,
AT&T rep Michael Coe tells
the AP. The contract-free phone will still be locked to
AT&T.

That hasn't stopped people before. We assume hackers will figure
out how to unlock and activate these phones just as easily as
they did the last time. After that, the only hurdle is the extra
$400 -- and whatever other buying requirements AT&T and Apple
come up with, like a throat swab or urine test.

Will people still even want unlocked iPhones, now that
Apple will be selling subsidized phones in more than 70
countries? Absolutely -- some people will still want to pick and
choose their carrier -- and some will want to use the iPhone in
countries where it's not on sale yet, like China. And as simple
arithmetic tells us, it's still cheaper for an Italian to buy a
no-contract iPhone in the U.S. ($499) than in Italy ($790).